How Tax Law Will Help Some Housing Markets

Tax overhaul is a boon for housing markets in low-tax states.

The tax overhaul is expected to create winners and losers among housing markets across the U.S., dealing a blow to high-cost coastal regions but potentially fueling demand in places in the middle of the country.

The law caps the amount of property and state income taxes filers can deduct, a provision that hits places like New Jersey, New York, Connecticut and California especially hard. It also limits the size of a loan on which homeowners can deduct mortgage interest to $750,000, down from $1 million, which could put a dent in pricey markets.

On the other hand, realtors and economic-development officials in less-expensive states believe they can benefit if the tax-law changes encourage people to reconsider their home address.

“At some point this draws attention to the cost gap in high-cost areas and growing areas with growing resources like Raleigh, Austin and Charlotte,” said Scott Hoyt, a realtor in North Carolina. “That’s going to be a boon.”

More From The Wall Street Journal (subscription required):